Are you considering investing in commercial real estate in the Triangle? Whether you’re searching for a new space for your business or a new investment opportunity, breaking into the local market can be intimidating. As industry leaders, our team of experts at Insight Property Group have devised this helpful list of the top questions you should ask as you begin this challenging and rewarding process:
What Should I Know Before Investing?
Before pulling the trigger on any one property, it’s important to evaluate market research and explore your investment goals. Start be considering why you want to invest. Are you hoping to diversify your portfolio? Do you want space to expand your business? Are you hoping to become a landlord or developer?
Next, narrow down your goals and start gravitating towards different investment strategies. Do you want to directly own property or use investment tools like a trust or real estate investment group? You’ll also want to consider which type of property best suits your goals. By looking at different property classes, you’ll get an idea of whether to renovate, expand, or start anew. From there, you can plan ahead for different risks associated with each kind of property type and investment method.
How Much Money is Needed for Commercial Property Investments?
The answer depends greatly on the property type, class, and investment strategy you’re using. For instance, the price of a single office building will be far smaller than an entire retail center. Most banks require 20 percent of the purchase price as a down payment. There are also closing costs to consider. You’ll also need a cash reserve to cover emergencies and any gap in occupancy. It’s a good idea to have a contingency budget of between five and 15 percent.
What is a Good ROI on Commercial Real Estate?
The National Council of Real Estate Investment Fiduciaries (NCREIF) reports that the average 25 year return for private commercial real estate investment properties was 9.4 percent. This is a good jumping off point, but it also helps to look at capitalization rates. A good cap rate falls between 5.5 and seven percent. Absorption rates are another factor worth considering. It can help you determine how quickly properties are coming off the market in your specific area.
The Professional Insight You Need
If you’re hoping to invest in commercial real estate in the Triangle, don’t go it alone. The experts at Insight Property Group can help you answer the aforementioned questions as they pertain to your goals. For the best commercial real estate investment experience in Raleigh, contact us today.